Agassiz & Odessa Mut. Fire Ins. Co. v. Magnusson
| Decision Date | 20 August 1965 |
| Docket Number | No. 39492,39492 |
| Citation | 272 Minn. 156,136 N.W.2d 861 |
| Parties | AGASSIZ & ODESSA MUTUAL FIRE INS. CO., et al., Appellants, v. Cyrus E. MAGNUSSON, Commissioner of Insurance of State of Minnesota,Respondent. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
1. Corporations ordinarily may exercise not only the powers expressly granted them by charter and by statute but in addition such powers as are incidental or reasonably necessary to the performance of their express powers.
2. To establish that acts of a corporation are valid as incidental or reasonably necessary to exercise of its express powers, a corporation is not required to show that such acts are indispensable to exercise of such express powers.
3. With respect to insurance corporations organized to insure risks of losses arising from fire or other hazards, it is well established that under common law the express power to insure such risks carries with it the incidental or implied power to reinsure them with other qualified insurance companies on theory that such reinsurance is reasonably necessary for sound conduct of insurance business.
4. Where it was stipulated that '(a)dequate, competent, and reasponsible reinsurance is essential to the conduct of an insurance business,' Held township mutual fire insurance companies organized under Minn.St. c. 67 possessed same common-law right to reinsure their risks in other qualified insurance companies licensed for that purpose as did common stock insurance corporations.
5. Section 67.45, enacted in 1919, which permits township mutual fire insurance companies to reinsure their risks in associations comprised of like companies organized for that purpose; and § 67.33, subd. 1, enacted in 1927, which permits them to reinsure their risks with like companies, Held not mandatory so as to preclude such companies from reinsuring their risks with licensed reinsurance associations or companies other than those specified in these sections; or to otherwise restrict or nullify their common-law right to so reinsure their risks.
6. Neither in c. 67 nor elsewhere are there found statutory provisions which manifest a legislative intent to restrict or derogate the common-law right of township mutual fire insurance companies to reinsure their risks, or to preempt the field of reinsurance with respect to such companies. Statutes are presumed not to alter or modify the common law unless they expressly so provide, and a statute enacted to regulate the conduct of a lawful business will not be construed to impose unreasonable burdens upon it.
7. Legal maxim, 'The expression of one thing is the exclusion of another' does not require a construction of §§ 67.45 and 67.33, subd. 1, to effect that by their adoption legislature intended to preclude township mutual fire insurance companies from reinsuring their risks with licensed reinsurance organizations other than those specified in those sections in the absence of any expression to such effect therein.
8. To hold that by designating certain companies or associations in which township mutual fire insurance companies at their option might reinsure their risks under §§ 67.45 and 67.33, subd. 1, legislature intended thereby to preclude them from reinsuring such risks with other companies licensed to conduct reinsurance business here; and thereby require that they procure their reinsurance in a noncompetitive market where available reinsurance contracts lack many of the beneficial features of their present reinsurance contracts would imply that legislature intended to impose unreasonable burdens and restrictions upon such companies in disregard of statutory presumption in § 645.17(1) that '(t)he legislature does not intend a result that is absurd, impossible of execution, or unreasonable.'
Held orders of defendant requiring plaintiffs to terminate their present reinsurance contracts and to refrain from entering into future reinsurance contracts with Grinnell Mutual Reinsurance Company of Grinnell, Iowa, are invalid.
Scallen, Stone, Evidon & Harder, Minneapolis, Robert Kucera, Northfield, Tomasek & Vogel, Grinnell, Iowa, for appellants.
Robert W. Mattson, Atty. Gen., Robert A. Albrecht and David M. Lebedoff, Sp. Asst. Attys. Gen., for respondent.
Hansen & Hazen and Wayne P. Dordell, St. Paul, amicus curiae.
Action by 28 township mutual fire insurance companies licensed under Minn.St. c. 67 to enjoin Cyrus E. Magnusson, commissioner of insurance of the State of Minnesota, from taking any action under an order issued by him on October 23, 1962, which directed plaintiffs to terminate their reinsurance contracts with Grinnell Mutual Reinsurance Company of Grinnell, an Iowa corporation licensed to do a reinsurance business in Minnesota, referred to herein as Grinnell, and which ordered them to refrain from entering into any new reinsurance agreements with this company.
Based upon a stipulation of the parties the court made findings and ordered judgment upholding the order described and a similar order dated February 25, 1960. Plaintiffs' subsequent motion for amended findings or for a new trial was denied. This appeal is from the last order and from the judgment entered against plaintiffs.
In a stipulation of facts, the parties agreed:
That plaintiffs have engaged in business as township mutual fire insurance companies for many years; that as of December 31, 1962, their combined membership exceeded 50,000 persons; that on that date the total face value of policies issued by plaintiffs was $505,071,554; that adequate, competent, and responsible reinsurance is essential to the conduct of an insurance business; and that each of the plaintiffs has reinsured their risks under contracts with Grinnell Mutual Reinsurance Company of Grinnell, Iowa, an Iowa corporation licensed and qualified to conduct a reinsurance business in Minnesota.
That the continuance of plaintiffs' present insurance contracts with Grinnell is economically advantageous to them in that policies issued to them by Grinnell are nonassessable, guaranteed premium policies; and for the further reason that Grinnell provides certain services to plaintiffs, including a program for the prevention and control of losses; an investigative service with reference to claimed losses; an engineering service for loss prevention, analysis of losses, and reduction of hazards; a service for improving office procedures, records, and accounting practices; and an educational program for training officials of the plaintiffs.
That as an alternative, if the orders of the commissioner are upheld, plaintiffs will be required to either reinsure with each other pursuant to § 67.33 subd. 1, which would be economically hazardous and disadvantageous to plaintiffs; or to organize a mutual association for reinsurance purposes under § 67.45 which likewise would be economically hazardous and disadvantageous to plaintiffs; or to reinsure with Farm Mutual Reinsurance Association of Esko, Minnesota, referred to herein as Esko, which is the only mutual association in Minnesota organized for reinsurance purposes under § 67.45.
That plaintiffs is the exercise of their business judgment have no desire to reinsure their policies with Esko.
The statutes involved, in chronological order, provide as follows:
Minn.St. 67.12. L.1909, c. 411, § 1, as amended.
Minn.St. 67.40. 'Except as therein provided, all township mutual fire insurance companies heretofore or hereafter organized in this state shall be governed by Laws 1909, Chapter 411 and exempt from all provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose, and no law hereafter passed shall apply to the company unless it shall be expressly designated in the law that it is applicable to township mutual fire insurance companies.' L.1909, c. 411, § 24.
Minn.St. 67.27, subd. 3. 'No law relating to insurance companies now in force in this state shall apply to township mutual fire insurance companies unless it shall be expressly designated in the law that it is applicable to these companies.' L.1915, c. 107, § 1.
Minn.St. 67.45. 'Not less than six duly licensed township mutual fire insurance companies or farmers' mutual fire insurance companies may organize a mutual association for the purpose of reinsuring any part or all of any risk or risks, written by any of the member companies.' Ex.Sess.L.1919, c. 55, § 1, as amended.
Minn.St. 67.33, subd. 1. L.1927, c. 271.
Minn.St. 67.33, subd. 2. 'Any township mutual fire insurance company may become a member of a reinsurance association such as provided for under sections 67.45 to 67.54, for the purpose of reinsuring any part or all of any risk or risks written by it.' L.1957, c. 285, § 1.
In its findings and conclusions the court determined:
'Chapter 67 of Minnesota Statutes is the exclusive law governing township mutual fire insurance companies * * * except insofar as other insurance statutes expressly state that they are applicable to these companies.
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